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SELLING YOUR PROPERTY  

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Selling a property in Spain can be a smooth process and we recommend that sellers engage the services of a professional lawyer to assist and advise them in the process.

CAPITAL GAIN TAX

Sellers pay a capital gains tax (PLUSVALIA) which is special and personal for each client. We advise sellers to consult with their lawyer on how much they could be expected to pay in Capital Gain Tax.

RETENTION

The buyer is obliged to withhold 3% of the purchase price and pay this amount directly to the Spanish Tax authorities, if the seller is a non-resident and has owned the property for less than 10 years.  This is to ensuring that the capital gains tax (CGT) is paid by the seller and to prevent them from taking the money abroad and not paying their tax bill.  Once the CGT is calculated, the seller will either receive a refund or be billed for an additional amount depending on the amount of tax that is owed.

For the Tax Authorities to authorise a refund, the tax payers must have submitted their annual income returns as a non-resident and be up-to-date with all payments.

If the buyer does not withhold this amount they will automatically become responsible for the sellers CGT.

ENCUMBRANCES

Sellers must also pay the fees for cancellation for any encumbrances on the property such as mortgages, unless otherwise agreed between buyer and seller.  If the buyer is intending on purchasing with a mortgage then they might want to consider simply taking over the seller’s original mortgage (being careful to check the terms and conditions), as this will be cheaper than setting up a new mortgage.

Other important factors to know when selling a property in Spain:

ENERGY PERFORMANCE CERTIFICATE

In compliance with European directives on energy and environmental issues, the owners of existing homes must provide potential buyers with the property’s energy performance certificate, which must be issued by a qualified technician.

The following, among others, are excluded from this regulation’s scope of application:

2. a)    Properties with a useful surface area below 50 m2.
3. b)   Properties that are used for less than four months a year, or which are inhabited for a longer period of time, but whose energy consumption does not reach 25 % of what its use would normally be for a whole year.

LAWYERS’ FEES

In general, the lawyers fee comes to 1% of the sale price, plus current VAT. The fees must be agreed at the start of the contractual relationship and not increase throughout that relationship, except where the initial assignment undergoes considerable modifications at the client’s express request. The lawyer’s professional fees are an expense that can be deducted when calculating the Capital Gain Tax associated with the sale.

DECLARED SELLING PRICE

Not too long ago Tax evasion was fairly common when buying a property in Spain.  Sellers used to declare the sale price at a much lower value than the actual selling price in order to lower the level of capital gains tax that was due.  Buyers were complicit in this process as this also lowered the amount of tax due on the purchase.

However, in the last 10 years this situation has changed drastically and the Spanish tax authorities have targeted property transactions in particular.  The tax auditors will tax according to their valuation of the property and not the declared selling price. Consequently, under-declared values have practically become a thing of the past. iHOME Property are experienced and have up-to-date knowledge of the current laws.  We are happy to advise any owner choosing to list their property with us. If you would like to speak with us about listing your property, or have any questions that are not covered here, do not hesitate to contact us.